Dubai’s Al-Futtaim Group to purchase CMC Holdings for $86.67 million
Posted Monday, September 9 2013 at 15:31
- Al-Futtaim Group has announced that it plans to purchase all the shares of CMC Holdings for Ksh7.5 billion.
Al-Futtaim Group, a Dubai-based conglomerate, has announced that it intends to purchase regional motor dealer CMC Holdings for Ksh7.5 billion ($86.67 million).
The Dubai firm, which operates through more than 100 companies in over 20 markets including the Middle East and Asia, on Monday announced that it plans to purchase all the shares of the Nairobi Securities Exchange (NSE) listed firm.
Al-Futtaim Group’s disclosure brings to end months of speculation that started after Joel Kibe, CMC Holdings chairman in June this year during the motor dealer’s 48th and 49th combined annual general meetings said that the firm had informed the Capital Markets Authority (CMA) of a potential share deal.
“We believe in CMC Group, our first sub-Saharan target, the great brands it sells and the employees behind its success over the years. We also respect the heritage of the company and its 65 year-old history in fostering economic development in Kenya,” said Marwan Shehadeh, group director corporate development, Al-Futtaim group in a statement.
Mr Kibe had disclosed that the company was going through due diligence, but the deal had not yet been concluded.
The motor dealer had not held an annual general meeting for two years after board room wars broke out and spilled into the public domain.
This led to investigations and disclosures of fraud and misappropriation of funds that had been taking place over a period of years.
CMC Holdings shares were suspended from trading at the NSE on September 16, 2011 after they last traded at Ksh13.50 ($0.14) and shareholders have not been able to buy or sell ever since.
Although the Al-Futtaim Group did not give a timeline on the planned deal, it said that it will make the purchase through a cash offer at Ksh13 ($0.15), a move that could allow investors to cash out of the company.
“We are continuing our expansion drive across Africa and we hope that CMC will be the jewel in the crown of our inroads into the continent,” said Mr Shehadeh.
CMC Holdings posted a profit after tax of Ksh105.35 million ($1.2 million) for the period ended September 2012 from a loss of Ksh181.14 million ($1.8 million) over the same period the previous year.
The company’s Kenya subsidiary posted a profit of Ksh177.28 million ($2.07 million) as at the end of September last year compared to a Ksh307.45 million ($3.08 million) loss after tax the previous year.
Its Uganda subsidiary saw its profits after tax drop by 70.89 per cent to Ksh25.6 million ($300,223) from Ksh87.94 million ($880,921) over the same time period while its Tanzania subsidiary posted Ksh94.78 million ($1.11 million) loss compared to a profit of Ksh43.11 million ($431,836) the previous period.
CMC has been plagued by a series of business challenges occasioned by board room wrangles and the loss of key franchises.
Last year, the company’s major shareholders—Peter Muthoka and Joel Kibe— were engaged in a protracted boardroom war following accusations that logistics company Andy forwarders, a company associated with Mr Muthoka, had overcharged the motor dealers.